Activision Blizzard has just reported the results of the fiscal third quarter. The company hit its own expectations, but it was too short compared to what Wall Street expected. That has put the shares of the company in a small downward spiral. But it looks like it has a savior in waiting. Call of Duty: Black Ops 4 was launched on October 12 and it is a sales mill.
As part of the revenue report, Activision described the latest Call of Duty performance. The modern military shooter has sold more copies than Black Ops III for the first three weeks. A large part of these sales come from PC and Blizzard's Battle.net service. According to Activision, the PC sales of Black Ops 4 are three times as high as those of Black Ops III.
That makes this one of the best-selling Call of Duty games ever. And it certainly surpassed Advance Warfare and the Second World War, the two most recent predecessors, during the first three weeks.
The publisher also forgoes his engagement numbers. It states that active users are 16 percent more than Black Ops III. And hours also played a 20 percent increase over the last Call of Duty from developer Treyarch.
Activision gives a weak prospect despite Black Ops 4
But while Call of Duty is ready to deliver a number of large quantities for Activision during the fourth quarter, the publisher generally does not have high expectations. While a consensus between Wall Street analysts predicted the company's earnings per share of $ 2.64 for fiscal year 2018, the company gave an expectation of $ 2.46 per share.
It was even bleaker for the fourth quarter. The consensus among analysts was $ 1.34 earnings per share next quarter, but Activision expects earnings per share of just $ 1.27.
After that conservative outlook, the share price of the company fell by 10 percent in trading after closing time. From the time of this writing, the shares sell $ 56.50 per share.
In a statement to investors, however, Activision chief executive officer Bobby Kotick remained optimistic.
"The results of Activision Blizzard for Q3 exceeded our previous expectations because we continue to entertain a large audience, create deep involvement and attract significant public investments within our franchises," said Kotick. "Our unique advantage remains our ability to create the most fascinating interactive and audience entertainment based on our own franchises, combined with our direct digital connection to hundreds of millions of customers in more than 190 countries." With these competitive advantages, we continue to connect and connect the world involve via epic entertainment. "
But Activision is also about & # 39; epic & # 39; business models. Last week, Treyarch started the in-game microtransactions for Black Ops 4 last week. If that game starts generating substantial revenue from digital items, Activision can easily exceed its expectations for the fourth quarter. And we'll see what happens to the share price when the company reports its fiscal 2018 results.
Why so low?
But if Call of Duty is so strong, why does Activision have such grim prospects for Q4? The answer is a combination of playing on expectations and Destiny 2. For the first time, the company does not yet know how well the Black Ops Blackout (BOBO) will earn against the generous fashion. If players make the habit of spending a lot of money, this can become a huge source of income. But the company will not trust that and then let it break through. It is better to focus low and exceed those expectations. That is what investors respond best to.
For the former Destiny is an example of a game that does not generate enough money – and that is according to Activision.
"Some of our other franchises, such as Destiny, are not performing as well as we would like," Kotick said during a conference call with investors.
Developer Bungie launched Destiny 2: Forsaken on September 4 and fans have responded positively to the new content. And yet Destiny does not deliver where it counts for Activision. And you can see that the publisher is trying to prevent that by giving base Destiny 2 away for free on PC to anyone with a Battle.net account. It also included the game in Sony & # 39; s PlayStation Plus subscription service at no additional cost. The hope is that more people will come in and start spending.
We will probably get a better idea if that worked during the next report that comes out of the holiday. For now I have to go back to BOBO.
Corrected at 14.49. to display the correct Q3 and Q4 digits.